Are Medicare Managed Care Plans Steering Members To Low-Quality Nursing Facilities?

Last year, a friend with complex medical needs had multiple stays at a skilled nursing facility (SNF). He was a member of a Medicare Advantage managed care plan and, as a result, could choose among only a handful of in-network facilities within a reasonable distance of his home. The care he received at the available facility was poor and since observing his experience, I wondered whether it was typical for a Medicare Advantage member. A new Brown University study suggests it might be.

Last year, about 19 million Americans, one-third of Medicare participants, were enrolled in MA plans. This model holds the promise of fully integrating health care and long-term services and supports—a great benefit for frail older adults. But critics worry that when managed care organizations are at financial risk for the cost of care, they may skimp on quality to save money. That certainly was my concern when visiting my friend.  And  a new study in the journal Health Affairs (paywall) suggests that fear may be well-founded when it comes to skilled nursing care.

The research, by David Meyers, Vince Mor, and Momotazur Rahman at Brown University, concludes that seniors in traditional fee-for-service Medicare are more likely to be admitted to high quality nursing facilities than MA enrollees. And they found that members of lower-quality MA plans were the most likely to receive care in the poorest quality SNFs.

The paper used two ways to measure SNF quality: the Centers for Medicare and Medicaid Services (CMS)  star rating system  (1 is the lowest and 5 is the highest ) and hospital readmission rates.

Many MA plans rely heavily on so-called narrow networks of providers, such as doctors, hospitals, and nursing facilities. Ideally, those networks should be based on value–a combination of quality and price. But there is some evidence that plans may focus primarily on cost. In effect, they send their members to those providers with which they can negotiate the best price. Quality of care is much less important.

By contrast, those in traditional Medicare may pick any facility for post-acute rehabilitation, as long as a bed is available. (Remember, this study is about Medicare post-acute care, not long-term care which is not paid for by either fee-for-service Medicare or managed care).

As the authors acknowledge, their study has some significant limitations. One is that the CMS rating system is not an especially good indicator of patient outcomes. The star ratings are based primarily on safety measures rather than on the quality of life that is so important to frail older adults.  Similarly, there is little evidence that a facility with, say, a four star rating produces better patient outcomes than one with three stars.  Still, the paper raises important questions.

The paper touches on another critical issue: Are MA plans being short-sighted by steering their members to low-quality nursing facilities. In the case of my friend, the poor quality of his SNF care may have led to at least some of his many hospitalizations. And those hospital admissions likely cost the insurance company more than it saved by using a low-cost SNF.

The Health Affairs article shows that members of low-quality MA plans were admitted to SNFs with significantly higher hospitalization rates than those in higher quality managed care plans or seniors in traditional Medicare. But the paper did not look at whether those Medicare Advantage patients themselves were hospitalized more frequently than similar patients in traditional Medicare. That may be the subject for another study.

The lesson for consumers is clear: When deciding whether to choose between traditional Medicare and Medicare Advantage, or when picking among MA plans, take the time to learn which nursing facilities (and, for that matter, hospitals) are in their networks. It may not matter much when you first enroll in Medicare (SNF utilization is relatively low for 65-year-olds) but it may be critically important when you face a health care crisis down the road.

That due diligence won’t be perfect. After all, plans switch network providers all the time. But it may give you some sense of the insurer’s priorities.

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